New York Community Bancorp (NYCB) will receive a $1 billion bailout from a group of investors led by former U.S. Treasury Secretary Steven Mnuchin. The bank absorbed some of the assets of failed Signature Bank and underwrote billions of dollars in loans that were subject to stricter regulatory standards. NYCB is also threatened by its high exposure to commercial real estate, which has fallen significantly in value since the rise of remote work.
WaFd Bank CEO Brent Beardall (WaFd) joins Yahoo Finance to discuss NYCB's $1 billion rescue plan and what investors should keep in mind when it comes to local banks and commercial real estate.
Beador explains that commercial real estate as a whole is too broad to be categorized as a risk. To understand the nature of an investor's exposure to commercial real estate, Beador highlights his three key points. “Number one is location. It’s no secret. We all know that in real estate it’s all about location, location, location… Number two is how much capital these borrowers are putting into the deal. Understand who they are, because it shows how much time they are willing to spend to solve the problem. If they have a lot of capital in the deal, they are willing to work with you. They'll say, “We're going to seriously work with you to resolve the issue. And lastly, the sponsor. You need to understand how the sponsor will behave. Are you going to say it’s your problem, or will they work with you to solve the problem?”
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Editor's note: This article was written by Nicholas Jacobino
